In real estate appraisal, what is the significance of determining accrued depreciation?

Determining accrued depreciation is crucial in calculating the current value of a property because it reflects the reduction in value of the property due to various factors, such as physical wear and tear, obsolescence, or changes in the market. By assessing accrued depreciation, appraisers can establish how much value has been lost since the property was originally purchased or developed.

This assessment is a key part of the appraisal process; it ensures that the appraisal reflects the property's actual worth in its current condition, taking into consideration not only the original cost but also any losses in value over time. This primary focus on current valuation helps potential buyers, sellers, and lenders make informed decisions based on a property's actual condition and market position. Therefore, understanding accrued depreciation allows for a more accurate and realistic current valuation of the property.